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10 College Money Myths to Avoid

If you have kids heading to college this fall, be sure to have some open discussions about money with them.

In addition, a check in call after a month specifically to discuss money isn’t a bad idea.

Here are some financial topics that you can use to get the discussion started on their path to becoming a financially smart college student.

College Money Myths

These popular money myths won’t help you get ahead financially. Do your best to avoid them in college.

College Money Myths to Avoid

  1. Myth: Buy your textbooks immediately. Wait until after your first class to see if you need a certain version of the recommended text. Other textbook tips for college students [1] include shopping for books online and reselling them once you are finished. Also find out if your textbooks are included at Openstax [2]. It’s a nonprofit providing free openly licensed college textbook. Share the message on Facebook [3] with people who can use them!
  2. Myth: Use the University medical plan. You need to understand your current medical insurance plan. Since Obamacare [4] was implemented, children can now stay on their parent’s health insurance plan until age 26. Many plans have increased costs for out-of-network doctors. Consider what your out of pocket cost will be in the area your child attends school. However, it could be even more expensive to use the medical insurance your school offers. Do a comparison of the plans and costs; just make sure you don’t go without any insurance. Going without health insurance will also subject you to the penalty for no health insurance [5].
  3. Myth: You must wait until after college to start a retirement plan. College is a great time to start a Roth IRA. Put away some of the money you earn from your summer or part-time job in a Roth IRA. You can contribute to a Roth IRA in College [6]. Funding a retirement plan during college was one of the key reasons I was able to leave my corporate job at 29 [7].
  4. Myth: You must pay your tuition with a check. Find out if you can pay your tuition on a credit card. If so you can use cash rewards credit cards [8] to get cash back on your tuition. Just be sure to find out the fee and make sure you’ll earn more in rewards than the fee.
  5. Myth: Fully furnish your dorm room or apartment. Instead, give your new roommate a call. By coordinating bigger items, you’ll save some money and avoid showing up with two toasters and no t.v. Check out How to Save Money When You Go Away to College [9] for more ideas on furnishing your dorm or apartment.
  6. Myth: Always use the meal plan. I can’t tell you how much money I wasted on the meal plan since you could only add money in $250 increments. Plan ahead and you won’t have to spend $200 on food in one week! Be sure to find out exactly how your meal plan works and plan accordingly. In addition, be sure to check out other options for cheaper (and healthier) food choices. See 11 Ways to Save on Food in College [10].
  7. Myth: Keep using your hometown bank. You may want to explore local banks in your college town. Our university had a free credit union with branches all over campus. They had free ATMs, checking and savings accounts. It might be more convenient than your old bank. If you want an online bank, Schwab offers a free checking account and reimbursements for ATM fees. You can also get a Schwab Checking and Brokerage $100 Sign Up Bonus [11]!
  8. Myth: Buy everything you could possibly need. You can save a bundle by waiting to finish your shopping. Before leaving for school, I made sure to buy everything on those college checklists. It wasn’t until I was there that I realized I could still go to a store and buy some stuff; you might find you don’t even need it all to begin with.
  9. Myth: Assume your belongings are insured. Inform your insurance agent that you are moving out. Determine if your belongings will be insured under your homeowners policy, or check out a renters policy. You’ll also want to let them know if you are taking your car, as it will be garaged at a new location. Don’t end up uninsured in the event of a fire or other catastrophe.
  10. Myth: Student loans are the only option to finance your education. Being frugal in college doesn’t have to ruin your fun. Check out Six Ways to Avoid Student Loan Debt [12] for ideas. In addition, college is a great time to explore money making ideas [13].

What are your favorite tips for helping kids to become financially smart college students?

More College Money Resources